The industry shows signs of recovery: in the first half of 2015, the year-on-year growth rate of retail sales of clothing products of 100 key large retail enterprises in China bottomed out; the export situation continued to be sluggish; the growth rate of industry revenue and total profit continued to slow down; the profitability slightly improved. According to the published financial data, the overall profitability of the textile and clothing sector began to show a slow upward trend since the bottom in the third quarter of 2014. In addition, the expansion capacity of the industry has been continuously strengthened. Since the growth of sales revenue and net profit in the third quarter of 2014, the industry began to show a trend of rapid expansion.
The rapid growth of the sector stems from the strong expectation of transformation: from the beginning of 2015 to the present, the overall growth of the textile and clothing sector is 143.6%, ranking 11th among 67 sub sectors of Wande. A weak recovery in fundamentals is not enough to support a significant increase in the sector as a whole. In the last half of the year, the textile and clothing sector has increased significantly, mainly because many companies in the industry have carried out mergers and acquisitions in the same industry, as well as cross industry strategic layout. These companies are characterized by abundant cash flow, small market value, declining main business or weak growth. Focus on the company: focus on Huasi (002494. SZ), Mengjie home textile (002397. SZ), leading bird (603555. SH), langzi (002612. SZ) and Aokang International (603001. SH), which are transforming to mobile social networking, smart home furnishing, fashion and cross-border e-commerce.
Investment proposal for the second half of 2015: after the rapid adjustment in June, the textile and clothing sector as a whole has recovered more than 20% from point to point. We believe that after the rapid adjustment in the short term, the accumulated risk of rapid rise in the early stage has been released, Under the background of continuous recovery of textile and clothing fundamentals, industrial transformation and upgrading (cross-border e-commerce, Internet finance, outdoor sports, fashion industry, mobile social networking), and continuous deepening of reform, the board will regain its momentum and look forward to the trend of the second half of the board.
Risk tip: in the past year, the cumulative increase is too large, the overall P / E ratio of the industry is too high, and there is a short-term callback pressure; the performance recovery of the textile and clothing industry is not up to expectations; the transformation strength is not up to expectations, and the performance improvement degree after transformation is lower than expectations.
